Silicon Valley: The Capital of Venture Capital

One of the key questions I ask in my book and I think this one of the key questions of everything if you look at the history of our economy. Why did Silicon Valley take over leadership of the technology industry in the 1970’s? I'm just going to read one little more brief thing from that. Today, many financiers and entrepreneurs assume the west coast always dominated the VC business. They simply don't realize the industry was pioneered by ARD and a few other firms in the northeast. The rise of the west was far from predestined and was not even obvious to the industry's movers and shakers more than 30 years ago. So why did Silicon Valley take over? Part of the answer, I argue, is in geography and history. In pre World War II America, the northeast enjoyed regional advantage based on its technological and financial superiority. If you think about it, MIT was the tip science and technology university. Harvard business school was the leader in business education and New York was obviously the financial capital of the world. So you put all those ingredients together, it goes a long way towards explaining why the northeast was the leader in entrepreneurial technology. Also, after World War II, the regional advantage was increased because Boston became the epicenter of military research and development. Other than the Manhattan Project I would argue, MIT ran the two most important government research labs of the mid 20th century. One was the Radiation Lab which invented radar, and the other was the Lincoln Lab founded in 1951 with funding from DoD and that was the lab that actually gave birth to Digital Equipment Corporation because Ken Olsen was an engineer at the Lincoln Lab who developed the technology for the computer while working for the government. But in the 1960's, the west coast began to take over the tech industry, hospitable climate and a greater acceptance of ethnic diversity certainly gave the west an edge in attracting creative talent. Higher ...